Circular Economy Products Can Compete with New at Retail Price

Why It Matters

This research suggests that businesses can successfully integrate circular economy principles into their operations without necessarily sacrificing market share or revenue. It challenges the perception that sustainable products must be priced lower than conventional alternatives.

Key Finding

The study found that consumers are most attracted to electronic products that have undergone some level of refurbishment or reuse, and they are willing to pay the same price for these as for brand-new items. This demand primarily diverts sales from new products rather than used ones.

Key Findings

• Consumers prefer partly circulated products over fully or not at all circulated products.
• Circular products can likely enter the market successfully at the retail price of a new product.
• Circular products primarily compete with new products, with less impact on the market share of second-hand options.

Research Evidence

Aim: To identify the key factors influencing consumer demand for reused and remanufactured electronic products.

Method: Choice-based conjoint experiment

Procedure: Participants were presented with hypothetical electronic appliance choices (mobile phones and robot vacuum cleaners) with varying levels of circularity (new, partly circulated, fully circulated) and asked to make purchasing decisions.

Sample Size: 800 adults in the United Kingdom

Context: Consumer electronics market (mobile phones, robot vacuum cleaners)

Design Principle

Embrace circularity by designing products that can be effectively reused or remanufactured, and market them at parity with new products to capture consumer interest.

How to Apply

When developing new product lines or redesigning existing ones, consider how components can be sourced from reused or remanufactured streams and how to market these products effectively to compete with new offerings.

Limitations

The study focused on specific electronic product categories and a UK consumer base, which may not generalize to all product types or global markets. The hypothetical nature of the experiment might not perfectly reflect real-world purchasing behavior.

Student Guide (IB Design Technology)

Simple Explanation: People like electronics that have been partly fixed up or reused, and they'll pay the same price for them as for new ones. This is good news for companies wanting to make things more sustainable.

Why This Matters: This research shows that designing for sustainability doesn't have to mean lower profits. It provides evidence that circular business models can be economically viable, which is crucial for encouraging widespread adoption of sustainable design practices.

Critical Thinking: How might the perceived quality and reliability of remanufactured products influence consumer willingness to pay the same price as new products?

IA-Ready Paragraph: Research indicates that consumers exhibit a preference for 'partly circulated' products, such as reused or remanufactured electronics, and are willing to purchase them at the same retail price as new items. This suggests a significant market opportunity for businesses transitioning to circular economy models, as these products primarily compete with new offerings rather than solely with existing second-hand markets.

Project Tips

• When researching consumer attitudes towards sustainable products, consider using conjoint analysis to understand trade-offs.
• Explore how the 'story' or origin of reused/remanufactured components can influence consumer perception.

How to Use in IA

• Reference this study when discussing consumer acceptance of circular economy products and the potential for market penetration of sustainable alternatives in your design project.

Examiner Tips

• Demonstrate an understanding of how consumer preferences for circular products can impact business strategy and product development.

Independent Variable: ["Level of product circulation (new, partly circulated, fully circulated)","Product type (mobile phone, robot vacuum cleaner)"]

Dependent Variable: ["Consumer demand/purchase intention","Market share competition"]

Controlled Variables: ["Retail price","Consumer demographics (implied by sample)"]

Strengths

• Utilizes a robust experimental design (choice-based conjoint) to simulate purchasing decisions.
• Investigates specific product categories relevant to consumer electronics.

Critical Questions

• What are the ethical considerations when marketing remanufactured products?
• How can the 'circularity' of a product be effectively communicated to consumers to build trust?

Extended Essay Application

• Investigate consumer willingness to pay for products made from recycled materials versus reused components.
• Explore the impact of branding and marketing on the perceived value of refurbished electronics.

Source

Determinants of consumer demand for circular economy products. A case for reuse and remanufacturing for sustainable development · Business Strategy and the Environment · 2020 · 10.1002/bse.2636